Picture this: you're eyeing two restaurant spaces, one in the bustling city center and another in a quiet neighborhood. The prime location costs 3-5 times more rent, but promises steady foot traffic. The quieter spot offers affordable rent but requires building your own customer base.
What makes a location A or B?
An A-location thrives on high foot traffic, excellent accessibility, and prime visibility. These are your shopping districts, tourist hotspots, and busy business areas. B-locations sit in residential neighborhoods, industrial zones, or side streets where foot traffic runs thin.
💡 Example location difference:
Restaurant 120m² in Amsterdam:
- A-location (Leidseplein): €8.000/month rent
- B-location (residential area): €2.500/month rent
- Difference: €5.500/month = €66.000/year
Rent costs: the biggest difference
Rent typically accounts for 60-80% of your location cost difference. A-locations demand €50-150 per m² monthly, while B-locations ask €15-40 per m². For a 100m² restaurant space:
- A-location: €5.000-15.000/month
- B-location: €1.500-4.000/month
- Difference: €3.500-11.000/month
⚠️ Note:
Calculate your total rent burden: base rent plus service charges plus municipal taxes. These extras can add 20-30% to your base rent.
Additional costs A-location
Prime locations pile on extra expenses beyond rent:
- Higher staff costs: Busier periods demand more hands on deck
- Security costs: Many busy areas require professional security
- Higher insurance: Greater theft and damage risks drive up premiums
- Staff parking costs: €100-300/month per employee
- Waste disposal costs: Higher volume means more frequent pickups
💡 Example total extra costs:
Restaurant 100m², A-location vs B-location per month:
- Extra rent: €6.000
- Extra staff (20 hours/week): €1.200
- Security: €300
- Parking (3 employees): €600
- Insurance: €200
Total extra costs: €8.300/month
Break-even calculation
Calculate how much extra revenue you need to justify an A-location. Formula: Extra revenue needed = Extra costs / Net profit margin
With an 8% net profit margin and €8.300 monthly extra costs, you'd need €8.300 / 0.08 = €103.750 additional monthly revenue. That's one of the most common blind spots in kitchen management - underestimating the revenue jump required to make prime locations profitable.
💡 Practical example:
With an average bill of €35:
- Extra guests needed: 103.750 / €35 = 2.964/month
- Per day: 2.964 / 30 = 99 extra guests
- If you currently serve 150 guests/day, you need 249
That's a 66% increase just to break even!
Advantages of A-location
Prime spots offer financial perks that offset some costs:
- Higher average bill: Tourists and business diners spend more per visit
- Lower marketing costs: Natural foot traffic reduces advertising needs
- Higher occupancy rate: Fewer slow nights and empty tables
- Better weekday revenue: Office workers boost lunch sales
⚠️ Note:
Don't plan around peak days only. Your A-location must generate enough revenue on quiet Tuesday evenings to cover those hefty fixed costs.
Financing impact
Higher operational costs require deeper pockets upfront:
- Higher deposit: Landlords typically want 6-12 months rent upfront
- More working capital: Cover elevated staff and operational costs
- Higher credit needs: Bridge slow periods without cash flow panic
Expect to need €50.000-100.000 more startup capital for an A-location compared to a similar B-location space.
How do you calculate the extra costs? (step by step)
Gather all rent costs
Note base rent, service costs, municipal taxes and any parking costs. Add these up for both A and B location. The difference is your base extra cost.
Calculate extra operational costs
Estimate extra staff hours, security costs, insurance and other location-specific costs. Calculate with realistic amounts per month.
Determine required extra revenue
Divide total extra costs by your net profit margin. This gives the extra revenue needed to break even on the A-location.
✨ Pro tip
Track competitor revenue per square meter in your target A-location for 90 days before signing. Multiply their daily customer count by average spend to gauge realistic revenue potential - this prevents costly overestimation.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
How much percent of my revenue can go to rent?
Restaurants should cap rent at 8-12% of revenue. A-locations can push this to 15%, but only with guaranteed high revenue streams.
Are A-locations always more expensive in total costs?
Not necessarily. A-locations often slash marketing expenses through natural customer flow. Plus, higher average bills can offset the premium costs.
How do I estimate the number of extra guests?
Observe foot traffic at different times and days. Count passersby and note what percentage enters similar establishments. Always calculate conservatively - disappointment costs more than caution.
What if I can't cover the extra costs?
Then the A-location exceeds your financial capacity. Consider a B+ location as middle ground, or redesign your concept for higher per-guest spending.
Should I account for seasonal fluctuations?
Absolutely crucial, especially in tourist-heavy A-locations. Calculate whether you can survive low season with the same fixed costs.
How do utility costs differ between A and B locations?
A-locations typically face 15-25% higher utility rates due to commercial district pricing. Factor in increased usage from higher customer volume too.
What's the typical lease length difference between location types?
A-location landlords often demand 10-15 year leases versus 5-10 years for B-locations. This locks you into higher costs longer but provides stability for your investment.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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